State of Chicago: The New Century Struggle

Last time I looked at Chicago’s 70s and early 80s horrible struggles followed by rebirth and robust out-performance during the 1990s. Today we turn our attention to the first decade of the 21st century. During the 2000s, Chicago experienced a bit of a two-track performance. Parts of the urban core continued to grow robustly, fueled by the real estate bubble and perhaps the greatest urban condo building boom in America. The culinary, cultural, and other scenes in Chicago only improved. Yet while there was a solid core of health at the center, the overall city and region stumbled badly with aggregate statistics that were, bluntly, awful in most respects. I’ve detailed these elsewhere already so won’t go in depth, but let’s review. These are metro area statistics unless otherwise noted.

Population

I already discussed how Chicago got shellacked in the 2010 Census. It was the only one of the 15 largest municipalities in the United States as of 2010 to lose population. The cities of New York, Los Angeles, and San Francisco hit all time record high populations. Philadelphia and DC grew for the first time since 1950, and Boston continued growing. But Chicago has now rolled back its population clock a hundred years and stands at its lowest population since 1910.

Chicago’s metro population growth of 4% was less than half the national average, and virtually all of that came at the exurban fringe. Chicagoland ranked 40 out of 51 large metros for population growth, though it did beat New York, LA, and Boston on a regional basis, which is positive.

International Population

This previous data was all from previous writings. I want to highlight a couple of other areas of demographic weakness though. First is international population. Chicago’s percentage of foreign born residents is 17.6%, which beats the national average, but trails New York and LA by over ten percentage points. It ranked 5 out of the 10 largest US metros. On a growth basis in foreign born population, Chicago did beat New York and LA. Those three were at the bottom in the percentage growth category, most likely because they all started from relatively high bases of total foreign born population. On a total change basis Chicago ranked 7th, with New York #1, but sick man LA brought up the bottom, a stunning change of fortunes for them.

The city of Chicago itself seems to have lost its allure to immigrants. The foreign born population of the city actually declined during the 2000s. Even during a decade of huge Hispanic population growth nationally, Chicago barely grew its Hispanic population. The city of Indianapolis, about a third of Chicago’s size, added nearly twice as many total Hispanic residents. To the extent that immigrants now see Chicago as an opportunity zone, it appears to be suburban Chicago.

Education

Chicago’s college degree attainment is in the middle of the pack for the top 10, ranking #5. Considering it came from an industrial heritage, I think this is pretty good.

However, Chicago only ranked 8th out of the top 10 in the growth in population with bachelor’s degrees.

This hardly suggests that metro Chicago is a talent magnet. If you look at the numbers vs. other large Midwest metros, Chicago is healthy, but not looking like it is pulling away from the pack. I don’t see anything to suggest that Chicago is hoovering up all the college grads in the Midwest.

Economy

Chicago lost 323,000 jobs during the 2000s, or 7.1%. The was the worst performance on a percentage basis of any of the 10 largest US metros:

One of the stats that took some flak from my City Journal piece was that private sector employment in the Loop had dropped by 18.6% during the 2000s. This seems at odds with the massive skyscraper boom and other improvements. This wasn’t my stat. It came from a Chicago Loop Alliance report, and they commissioned a credible analytics firm to do the work, and the data was also reported by the Chicago Sun-Times, so I believe it is solid. A few things to consider:

- This figure is for the Loop, not the Central Area (a bigger construct). The Loop does have the majority of the Central Area jobs, however.
- Much of the construction was residential, not commercial. Also, things like the booming Loop U probably brought in more students than jobs.
- Keep in mind that 2000 was the peak of the dotcom bubble. For reasons I’ll explore later, I believe this hurt Chicago badly. So there’s a tough comp (also why the Bay Area and to a lesser extent Boston look bad on comps vs 2000).
- Consider major Chicago companies that totally went out of business: Arthur Andersen and Whitman-Hart come to mind.
- Also consider that pledges of added jobs generally are trumpeted to the sky, while jobs are often cut silently as much as possible.

Looking at unemployment rate in our Chicago vs. NYC/LA chart from before, we now see that Chicago is no longer winning, though is beating LA:

Chicago is a large economy, but not a particularly high value added one. Out of the ten largest metros, Chicago ranks 8th in per capita GDP. (Chicago is 3rd among large Midwest metros on this figure)

Chicago also ranked eighth in real per capita GDP growth over the decade.

Chicago ranked 5th out of 10 in per capita personal income, beating LA:

But Chicago ranked only 8th out of 10 in PCPI growth:

On the whole, this is a rather uninspiring collection of economic statistics for the Windy City, particularly after it did so well in the 1990s.

Fiscal Crisis

No discussion of Chicago’s problems in the 2000s would be complete without a review of its fiscal problems. However, as I already gave the numbers in my City Journal article, I won’t repeat them here. If anything, the problem has only gotten worse since that went to press. While Chicago may not be the worst municipality in terms of fiscal issues, Illinois is the worst state, and that will continue to be a drag until it’s addressed.

Crime

Among the biggest complaints about my article was that I didn’t address the crime problem in Chicago. Without a doubt, crime is a problem. Murders are up 38% or so just in 2012. The city of Chicago has a much higher murder rate than the cities of New York or Los Angeles. There has also been a national headline grabbing series of high profile attacks in affluent areas like the Gold Coast and Streeterville. The strength of the Chicago Police Department is somewhere between 500-1000 officers short of where it should be.

I’m not the best equipped person to talk about crime, but I actually think the crime problem is overstated. Yes, it’s serious. The murder rate especially is troubling. But analyses I’ve read suggest that overall crime isn’t spiraling out of control in Chicago. Also, flash mob type attacks are happening across the country, in places ranging from Philadelphia to Portland. This isn’t a unique to Chicago situation. So I don’t want to claim that Chicago’s crime problems are uniquely bad, though they shouldn’t be minimized.

Without a doubt the incredible collapse in crime in New York perhaps more than any other single factor fueled that city’s comeback, and it wouldn’t surprise me if it were a big factor in that city’s out performance in the 2000s. Mark Bergen cited some interesting research that suggested that for every murder in your city, 70 people move out. If Chicago had matched New York’s crime performance, it would have held steady or even gained population based on this relationship. If true, wow.

Regardless, public safety is job #1 for any mayor, so Rahm Emanuel is rightly feeling the heat on this even if he can’t necessarily be blamed for what’s going on.

Schools

Others have cited Chicago’s poor public school system. Again, I’m not sure Chicago’s schools are any worse than any other big city system, and there are a number of magnet and neighborhood schools that are now attracting the children of the well-off. I’d have to see something that suggested Chicago took a turn for the worse on schools in the 2000s on a comparative basis.

Conclusion

On the whole I think it’s pretty clear that there was trouble in Chicago during the 2000s – and more trouble than most large cities experienced during what was a tough decade nationally.

Some rightly noted that I discuss the divergent performance of Chicago in the 1990s vs the 2000s, but that my structural factors that weaken Chicago were probably the same in both decades. So why the difference? I want people to know I plan to address that in a future post shortly, but next up we’ll have a look at Chicago’s present day strengths before moving on.

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